How does the U.S. stock payment sector perform in the economic winter? Bernstein's 2008 crisis simulation provides key answers

According to the Zhitong Finance APP, in the context of increasing downward pressure on the macro economy, Bernstein analysts have reviewed the market performance during the 2008-09 financial crisis to explore the potential impact of this year's economic recession on payment stocks. The institution pointed out that despite facing recession risks, the payment industry as a whole demonstrates strong resilience, but companies in specific segments will show significant differentiation.

In a report to clients, Bernstein analysts led by Harshita Rawat wrote: "Overall, we expect most of the companies we cover to exhibit relatively strong resilience during a recession."

They listed several reasons: long-term growth trends, especially in international markets; transaction volumes are less affected during economic downturns; inflation supports nominal purchase amounts; and stable pricing power and recurring revenue streams for businesses.

Using data from the 2008-09 recession as a reference, when actual GDP growth slowed by 5 percentage points and inflation briefly turned negative, credit card transaction amounts still grew at a low single-digit percentage, with transaction volume growth ranging from high single digits to low double digits, while cross-border growth slowed to flat or low single-digit declines.

Notably, during the Great Recession, debit card spending grew against the trend by 10%, while credit card spending only slightly decreased by 1%. E-commerce declined by a low single-digit percentage.

During this period, Visa (V.US) and Mastercard (MA.US) saw revenue growth of 9% and 4%, respectively. Payment processors like FIS (FI.US) and FIS (FIS.US) experienced flat revenue growth or low single-digit declines.

2025-26 Recession Scenario Simulation

Based on the economic recession assumptions from Société Générale/Bernstein, U.S. real GDP growth is expected to slow by about 1.5-2 percentage points compared to the full-year market expectations for 2025, with the recession anticipated to start in mid-2025 and end in early 2026.

Analysts specifically pointed out that the current forecast faces three major challenges: rapid changes in the macro environment, limited historical comparable data for the industry, and regional and product mix differences in business structures among companies.

Here are Bernstein analysts' views on the prospects of specific stocks, arranged from most favorable to least favorable:

FIS is expected to be the most resilient, followed by FIS, due to these companies' reliance on recurring revenue streams. Analysts wrote: "We estimate only a 1-2% negative adjustment in the case of a recession." Global Payments Inc. (GPN.US) "may face greater risks given its business mix."

Assuming zero to low single-digit GDP growth in 2025 (including one to two quarters of negative GDP growth), Visa and Mastercard are expected to see "moderate" low single-digit negative adjustments.

Bernstein stated that PayPal (PYPL.US) is expected to face a more significant negative adjustment—gross profit declining by 4% and earnings per share declining by high single digits—due to its exposure to discretionary e-commerce spending, credit business, and floating income Adyen (ADYEY.US): Based on its business structure focused on discretionary spending and one-third of its revenue coming from variable income, it is expected that its revenue will see a negative adjustment of about 3 percentage points, and earnings per share will decline by a high single-digit percentage.

Block (XYZ.US): Bernstein estimates that gross profit will see a negative adjustment of about 4%, and earnings per share will experience a double-digit adjustment due to its exposure to credit risk in small and medium-sized enterprises. Its vertical business provides some offset, as this segment is "quite diversified" and offers foundational support.

Toast (TOST.US): Bernstein indicates that a high single-digit negative adjustment and a double-digit earnings per share adjustment are expected. Considering Toast's reliance on new business formation and attrition, 15% of gross profit is related to working capital, and there is "some degree" of exposure to discretionary spending, this may be the "most macro-sensitive stock" within the company's coverage.

A recession is not inevitable

Although the slowdown in growth has almost become a foregone conclusion with the implementation of tariffs, a recession is not inevitable. Dennis DeBusschere of 22V Research stated in a recent report: "As growth slows to a new trend adjusted for tariffs, we may or may not experience a recession. What we know today is that the risk of recession is higher, and trend growth is slower."